May 16, 2016

We Are Certain Of Uncertainty

The Indy Star reports from Indiana. “Tyler and Brenda Ewigleben found out firsthand how competitive the Indianapolis-area housing market is when they decided to buy their first home this spring. When they found a house they liked, they knew their initial offer on the two-bedroom ranch with a loft would have to blow away the seller. ‘The home we ended up purchasing,’ Tyler said, “we actually offered $10,000 over the asking price because we were aware of multiple offers. We felt like we had to if we wanted our offer to be taken seriously.’”

“Real estate agents say homes are selling now as fast as they have seen in their careers. Sales close within days, and sometimes hours, of homes being listed. Last year, competitive interest rates, job growth and a loosening of lending standards spurred the strongest growth in the region since 2006, according to the Metropolitan Indianapolis Board of Realtors. The run on homes has left hopeful buyers scrambling to compete amid a shrinking supply. This has led to historically high prices. The market has not been this robust since it peaked a decade ago.”

KGH in Oregon. “In a new report from Christie’s International Real Estate, Portland comes in at number 8 on a list of the world’s hottest luxury housing markets. There are a number of multi-million dollar homes on the market, but they may not stay available for long. So who’s buying? Terry Sprague, the Founder of Luxe Platinum Properties, said in the last few months, he’s already done $10-15 million in sales. International buyers made up about 70 percent of that. ‘They’re actually specifically advertising our properties to their billionaires in China right now,’ he said.”

“Overseas buyers are buying homes for all sorts of reasons. Some want to live Oregon, others want to have a vacation home, and still others want an investment they think will go up in value. ‘Real estate is becoming a new currency,’ Sprague said. The rest of the luxury home buyers are often younger, successful people who many times have a well-paying tech job. The report points out that Portland is attracting entrepreneurs and highly paid workers from Silicon Valley. ‘Most recently I had two-million dollar, three-million dollar properties that have sold to 25, 30 years olds,’ he said.”

Fox 10 Phoenix in Arizona. “If you’ve looked for an apartment recently, you know that the cost of rent has increased significantly. In some areas, the average has jumped hundreds of dollars. The luxury market appears to be driving steep increases. And more high-end apartments are on the way. The Arizona Multi-Housing Association counts more than 11,500 apartments under construction or planned east of the I-17, only about 500 would be considered affordable.”

“In downtown Phoenix, the building boom is evident on nearly every corner. Large luxury buildings are popping up on long-vacant lots, and the rental prices are climbing fast. A two bedroom at the Cityscape Residences in downtown Phoenix with its picture windows and birds eye view of the city will set you back almost $2,200. Big investors hope to cash in. Downtown Phoenix will soon have hundreds more luxury apartments charging for top dollar rents. Rents that are forecasted to rise and show no sign of slowing down.”

The News Press in Florida. “Optimism persists in Southwest Florida’s new housing market, but a close examination of the facts foreshadows a hint of caution. We’re all seeing it and hearing it, but many just don’t want to admit it,. The most accurate forecast is that we are certain of uncertainty. Building permits for new housing in Southwest Florida were down by nearly 20 percent in the first quarter 2016 compared with 2015, the first substantial, first quarter decline in seven years. Much of the decline was due to fewer multi-family units permitted in Lee County.”

“The secondary, discretionary market appears to be slowing down, particularly from retirees purchasing second homes. Builders are starting to accumulate dozens of unsold new home inventory, primarily those priced over $500,000 in Naples. For example, a lot of speculative building has occurred in The Moorings west of US 41 near downtown Naples. Those homes in the $3-$4 million range are currently sitting unsold.”

The New Canaan Advertiser in Connecticut. “The signs are everywhere. Literally. These days you can’t drive on most New Canaan roads of any length without seeing ‘For Sale By Broker’ signs advertising the availability of the homes they front. The current inventory oversupply, and most realtors admit there is one, may be due to pricing. Everyone wants to make a big profit when selling, but timing, as they say, is everything. But price rules.”

“Selling for what you paid, or even for less than you paid, is reality for a lot of homeowners who bought within the last 10 years. It’s a hard thing to accept, for sure, and judging by all the for-sale signs planted in front yards, a lot of owners haven’t gotten there yet. New Canaan has always been a AAA-rated, much sought after destination for families. But at least right now, there is no for-sure happy ending, either for the residential real estate market or for this editorial.”

WSB TV in Georgia. “A local banker is blowing the whistle about what he calls improper dealings in a metro subdivision. One official told Channel 2 Consumer Investigator Jim Strickland that on the surface, it smacks of the housing crisis all over again. Defaults on big-dollar loans made on overpriced houses helped trigger the foreclosure crisis eight years ago. In a new Forsyth County subdivision, new homeowner John Laymac says he fears he and his neighbors could fall into the same trap.”

“Laymac is a loan officer, and was days away from closing on his $390,000 home. Then, an appraiser figured the value at only $365,000. Because of that, the bank where Laymac works denied his mortgage. ‘They were doing what a bank is supposed to do. They were setting the loan amount based on the correct valuation,’ Laymac said.”

“Laymac showed Strickland an email from his builder. ‘And he said, ‘I want you to go with my preferred lender, Brand Mortgage. They’ve never had a problem getting the value needed,’ he said.”

“In a filing with federal regulators, Brand Mortgage admits it has partial ownership of its own appraisal firm, Valuation Management Group. VMG dispatched a different appraiser. ‘And they came back with a value $25,000 higher than the original appraisal. The same as the sale price, coincidentally,’ Laymac said. Laymac told Strickland his kids faced immediate disenrollment from their Forsyth school if he failed to buy a house. He chose to close and pay extra. ‘Twenty-five thousand dollars. Extrapolate that over 30 years, close to $50,000,’ he said.”

“The builder, SR Homes, and Brand Mortgage refused on-camera interviews, but denied any wrongdoing. Valuation Management Group and the two appraisers wouldn’t talk to Strickland. So Strickland called 30-year veteran appraiser Beryl Tylar to look at each appraisal. She noticed the square footage and more. ‘The reason, in my opinion, that there is such a big variation in the two bottom lines is because of the comp selection, and that is a biggie in appraising,’ Tylar said.”

“The higher appraisal uses a comp sale of a home that costs $80,000 more than Laymac’s. She said there was an entire subdivision of more appropriate comps. ‘Personally, I would not have used it,’ Tylar told Strickland. Tyler added that the paperwork looks suspicious, but is not proof the appraisal Brand Mortgage received was wrongly inflated. ‘It doesn’t have to be an impropriety. The appearance of impropriety sometimes is enough,’ Tylar said. ”

“Laymac said he’s not the only one affected because his home is now a comp sale. Standard and Poor’s reports Atlanta metro home prices since November are up just 0.3 percent. But real estate listings for Layman’s neighborhood show since his closing, five-bed, four-bath home prices are up 7 percent. ‘So, yeah, it ripples through the entire neighborhood,’ said Laymac.”